Britain's Sainsbury's and Asda agree merger

London: Sainsbury's and Asda, the UK arm of Walmart, confirmed on Monday they are to merge to create Britain's biggest supermarket group by market share, surpassing current leader Tesco.

The combination will result in Walmart, the world's biggest retailer, holding 42 percent of the equity of the combined business and receiving 2.975 billion pounds ($4.1 billion), valuing Asda at about 7.3 billion pounds.

Joining together the UK's second and third-biggest supermarket chains will reduce costs and increase buying power but could face major regulatory hurdles.